Rising Prices, Falling Rupee and FPI Exit Pose Big Challenge to Economy
Modi Government Faces Tough Time to Control the Situation
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2026-05-25 13:20 UTC
India’s economy is navigating severe stress. The impact of Persian Gulf war, high cost of imported crude oil, frequent upward adjustment of retail oil prices, rising commodity rates, soaring transportation costs, weakening Rupee and continuous exit of foreign portfolio investors (FPI) are posing a big challenge to the economy. The government appears to be somewhat clueless about how to tackle the situation effectively. It has deployed both monetary and fiscal interventions. The measures don’t seem to be working as effectively as the situation demands. The falling Rupee is further raising the cost of imports. The US-Iran conflict has disrupted shipping through the Persian Gulf. India relies on the region for over 90 percent of its LPG and 60 percent of its natural gas imports, and the government and Reserve Bank of India (RBI) have been forced to implement supply-side distributions and emergency measures.